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Budget Summary - Summer 2015

Earlier today George Osborne delivered his seventh budget as Chancellor. A summary of the key points can be found below.

Alan Clarke, Chief Executive of Scottish Bakers commented: “The new National Living Wage offers people currently on the Minimum wage a pay rise of almost 11% between now and 1st April 2016. This will have a major impact on sectors where employees have low skills and it also puts pressure on wage differentials between low skilled and skilled employees.

There will also be a major impact on recruitment and potential redundancies where bakers try and keep wage costs within acceptable levels. In the current climate of food deflation this means that bakers will have to absorb these costs and research shows many examples, where increases in the minimum wage, leads to a reduction in the total number of people employed in a sector.

There is no instant recipe to make workers more productive and the size of the bakery market remains the same, bakers will as usual have to manage their business within an acceptable level of overall costs, otherwise there will be no business and this could create additional job losses.”

Budget Summary - Summer 2015

Personal taxation and pay

New national living wage will be introduced for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020 - giving an estimated 2.5 million people an average £5,000 rise over five years

Low Pay Commission to advise on future changes to rates

Inheritance tax threshold to increase to £1m, phased in from 2017, underpinned by a new £325,000 family home allowance

Personal allowance, at which people start paying tax, to rise to £11,000 next year. The government says the personal allowance will rise to £12,500 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax

The point at which people start paying income tax at the 40p rate to rise from £42,385 to £43,000 next year

Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax

Welfare and pensions

Tax credits and Universal Credit to be restricted to two children, affecting those born after April 2017

Income threshold for tax credits to be reduced from £6,420 to £3,850

Working-age benefits to be frozen for four years - including tax credits and local housing allowance, but maternity pay and disability benefits exempted

Rents in social housing sector will be reduced by 1% a year for the next four years.

Subsidies for social housing will be phased out with local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - having to pay up to the market rent

Disability benefits will not be taxed or means-tested while state pension triple lock to be protected

18-21-year-olds will not be entitled to claim housing benefit automatically, with a new "earn to learn" obligation

Employment and Support Allowance payments for new claimants who are deemed able to prepare for work to be "aligned" with Jobseeker's Allowance

Green Paper published on proposals for "a radical change" to pension saving system

The amount people can contribute to their pension tax-free to be reduced for individuals with incomes over £150,000

The cost of funding free TV licences for the over-75s transferred from the government to the BBC between 2018 and 2021

The annual household benefit cap will be reduced to £23,000 in London and to £20,000 in the rest of Britain.

Alcohol, tobacco, gambling and fuel

No rise in fuel duty this year with rates continuing to be frozen

Major reform to vehicle excise duties to pay for a new road-building and maintenance fund in England

New VED bands for brand new cars to be introduced from 2017, pegged to emissions for the first year. Subsequently, 95% of car owners will pay a flat fee of £140 a year

Alcohol and tobacco duties not mentioned in statement

Business

Corporation tax to be cut to 19% in 2017 and 18% in 2020

Permanent non-dom status to be abolished - from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens, raising an estimated £1.5bn

£7.2bn to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m

Bank levy rate to be gradually reduced over the next six years and a new 8% surcharge on bank profits introduced from 2016

Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November

New apprenticeship levy for large employers

Climate Change Levy exemption for renewable electricity to be removed

National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016

Dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5%, 32.5% and 38.1%.

Annual investment allowance will be fixed permanently at £200,000 from January 2016